Management Spans and Layers

8/17/2019 Management Spans and Layers

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Streamlining the Out-of-Shape Organization

Management Spans and Layers


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Originally published as:

Management Spans and Layers: Streamlining the Out-of-Shape Organization,

by Ian Buchanan, Jong Hyun Chang, Vinay Couto, Gary Neilson, Paolo Pigorini,

Joe Saddi, Jens Schädler, Eng-Ming Tan, and Akira Uchida, Booz Allen Hamilton, 2003.


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Do you recognize the hourglass organization? If you look

closely at the organizational chart of many public sector

agencies and institutions, you will see this unfortunate

phenomenon: excessive layers and narrow spans of control,

particularly among mid-level managers. The result is often

bureaucratic build-up, bottleneck decision-making, and a

general lack of innovation. Employees laboring in mission-

supporting roles are hamstrung by vertical decision-

making and multi-matrixed repor ting relationships. Their

career prospects are not enticing, and their creativity is

diminished. The view at the top is equally uninspiring…and

crowded. Organizations like these need to find lasting and

effective methods for getting in shape.

Rooting Out the Underlying CausesThe objective in streamlining the hourglass organization

(see Exhibit 1) is not just the obvious potential for

stripping out excessive cost; it is the concomitant

opportunity to enhance mission effectiveness by

simplifying decision-making, enhancing responsiveness,

and unleashing innovation. Achieving these benefits,

however, requires a new approach to organizational

restructuring, one predicated on true and lasting

behavior change rather than on deleting boxes on an

organizational structure chart.

Management Spans and LayersStreamlining the Out-of-Shape Organization

Wider span at the top

Senior management sets example

Wider spans justify senior management’sexistence

Narrow spans at the middle

Fixed layer structure

Higher spans at top and bottom “squeeze”

the middle

Widest spans at entry level

Influence of middle managers

Organization redesign efforts focusedon lowest levels

Typical Spans of Control by Layer

(number of direct reports)

Officer

8 to 9

Supervisor

8 to 14

Director

3 to 6

Manager

5 to 7

Senior Director

6 to 8

Observations

Lead Manager

4 to 6

Exhibit 1 | The Hourglass Organization

Source: Booz Allen Hamilton


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To achieve enduring, productive gains, organizations

need to look more than skin-deep for solutions. They

need to look beyond organizational charts and job

descriptions to the underlying “Mission DNA”—the

collection of behaviors, assumptions, beliefs, habits,incentives, and rules that determine how and why

people work together (see Exhibit 2).

Mission DNA is less visible and more difficult to get

at than an organization’s structure, but it is essential

to motivating stronger performance and ensuring

sustainable gains.

Although proliferating lines and boxes on an

organizational chart are an important indicator of

organizational dysfunction, not all spans are created

equally; some spans legitimately should be narrowerthan others. Excessive layers and narrow spans are

merely symptoms of potentially serious organizational

problems. Eliminating lines and boxes, therefore,

does not cure a dysfunctional organization; it simply

masks the symptoms. As discussed below, the root

causes of an organization’s structural dysfunctionare more fundamental.

Root Cause #1: Lack of Accountability “We need to protect our employees from themselves.”

Organizations that do not hold employees accountable

for their actions, results, and budget commitments

breed a culture of mistrust and incur extra costs

associated with excessive oversight. Additional

layers of management become institutionalized to

“chaperone” employees as they make day-to-day

decisions. From the outside, an organization might

look bureaucratic and/or incompetent, when the real

culprit is ill-defined accountabilities and performance

measures. There is no license for employees to

improve the organization and no incentive to deliver

against mission-critical objectives. Moreover, redundant

levels and approvals enable everyone to pass the buck

until the people making the decisions are no longer

accountable for the decisions they make.

Root Cause #2: Sub-Optimizing Silos“What’s good for my unit is good for the enterprise.”

Operational unit and/or functional silos will naturally

crop up in any large, complex organization as

managers compete for capital and resources. In an

attempt to optimize their individual performance,

however, units and functions often sub-optimize the

overall enterprise’s performance. Typical symptoms of

silo behavior are poorly placed resources, redundant

staffing and services, and inconsistent messages to

external stakeholders and the public. Although some

might diagnose these symptoms as warring internalfactions, the truth is that most units and functions

probably do not know each other well enough to wage

battle. The organization is too highly fragmented

and/or dispersed, and centralized coordination and

governance mechanisms are absent. Ironically, this

Exhibit 2 | The Four Building Blocks of Mission DNA

Source: Booz Allen Hamilton


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very fragmentation drives the need for more managers

to coordinate within and across silos.

Root Cause #3: Micro-Managers

“Our managers like to get their hands dirty.”

It is no coincidence that slow-moving organizations

often are bloated in their mid-section, with multiple

layers of management eager to justify their positions.

In pursuit of that goal, they “make work,” manifesting

an insatiable desire for detail and requesting

tremendous volumes of information that need to be

assimilated and reconciled at each level. Excessive

time is spent requesting, tracking, and approving

spending, personnel, and operating decisions.

Although the resulting organizational sclerosis

could be attributed to inexperienced or incompetent

subordinates, the root cause is management’s inability

to delegate decision rights to those employees closest

to the relevant information.

How To Be Flat and Happy… For GoodAs with any type of organizational change, there is no

single best way to remove layers. Some start at the

top with the lead officer or agency head commissioning

an audit of the organization. After benchmarking

the organization against internal and external best

practices, the senior team sets stretch goals to

restructure management spans and flatten layers.

Others “bubble up” solutions from below by engaging

the entire organization in “spans and layers” interviews

and workouts. These sessions drill down to identify

root causes of dysfunctional organization structures.

Once these root causes are identified, organization

leaders are charged with addressing them. Solutions

might include setting up self-managing teams, altering

management and employee responsibilities, and

redesigning career paths.

Whichever solution is adopted, however, it is wise to

remember six tenets of genetic reengineering as they

apply to Mission DNA.

1. Note that not all spans are created equally. Avoid

the seduction of simplistic targets (e.g., “no more

than five management layers/no fewer than three

direct reports”). Sustained improvements hinge

on developing the appropriate size and number ofspans and layers based on the nature of work, core

processes involved, and interactions required for

driving smart decision-making.

2. Create cross-functional teams with process owners

around key processes. Empower these teams with

real authority; they cannot be an afterthought or

window-dressing.

3. Design fulfilling career paths and staffing

strategies. Ensure that these paths and strategies

include horizontal moves that will challenge andreward managers who are faced with fewer classic

upward promotion opportunities.

4. De-program micro-managers. Train and hold

accountable the next generation of middle

management to delegate more decisions to the front

lines where relevant information resides.

5. Institutionalize communications vehicles. Break

through traditional roadblocks to ensure the free

flow of information.

6. Coach the change agents. Coach the change

agents—that is, the line managers who will not

only design and deliver the changes but also most

directly feel their implications.

In an environment of ever-escalating efficiency,

effectiveness, and performance requirements, public

sector organizations need to be fit and flexible to

prosper. Too many, however, are burdened with a

cumbersome organizational structure. Developing a

flattering and more streamlined profile is not only a key

to driving greater efficiency in the short term but alsoan invitation to enhancing mission effectiveness over

the longer haul.


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4

Case Study: Internal Revenue Service (IRS)

Since the passage of the Internal Revenue Service Restructuring and Reform Act of 1998, the IRS has

redefined its mission and reorganized its structure to better serve taxpayers. Working with Booz AllenHamilton, the agency has undergone a strategy-based transformation—moving from a 1950s-style geo-

graphic-function matrix to a modern structure, with customer-facing business units supported by shared

services and a small corporate core.

As part of that work, Booz Allen conducted a “spans and layers” assessment of the IRS’ sprawling and

increasingly cumbersome organizational model. We helped the agency reconfigure not only its structure

but also its overall operating philosophy from one based on geographic footprint (33 separate districts)

to operating divisions based on four customer segments: (1) Wage and Investment, (2) Small Business/

Self-Employed, (3) Large and Mid-Size Businesses, and (4) Tax-Exempt and Government.

Wiped away in the new model were management layers—an average of five layers per operating unit. Gone

as well was the traditional “top-down” decision-making process. Key to that transition was the introductionof a new concept of teamwork in which a diverse mix of levels and skill sets were brought together to focus

on specific issues.

In addition to the four new taxpayer-based operating divisions, the IRS now has four functional units:

(1) Taxpayer Advocate Service, (2) Chief Counsel, (3) Appeals, and (4) Criminal Investigations. It also has

a shared IT organization that supports field and headquarters operations more efficiently and expertly.

National headquarters has been reduced by 30 percent and is newly focused on policy, strategy, and over-

sight objectives. Having streamlined its back office and headquarters operations, the agency has been able

to shift resources to customer-facing functions (e.g., field support and customer care). The result: steadily

increasing customer satisfaction rates after years of declines.


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About Booz Allen

Booz Allen Hamilton has been at the forefront of

strategy and technology consulting for 95 years. Every

day, government agencies, institutions, corporations,

and not-for-profit organizations rely on the firm’s

expertise and objectivity, and on the combined

capabilities and dedication of our exceptional people

to find solutions and seize opportunities. We combinea consultant’s unique problem-solving orientation

with deep technical knowledge and strong execution

to help clients achieve success in their most critical

missions. Providing a broad range of services in

strategy, operations, organization and change,

information technology, systems engineering, and

program management, Booz Allen is committed to

delivering results that endure.

With more than 22,000 people and $4.5 billion in

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the fifth consecutive year, Fortune magazine named

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For,” and Working Mother magazine has ranked the

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Mothers” annually since 1999.

To learn more about the firm and to download digital versions of this article and other Booz Allen Hamilton

publications, visit www.boozallen.com. To learn more about Mission DNA, visit www.missiondna.com.

Lloyd W. Howell, Jr.

Senior Vice President

[email protected]

703/902-4730

David Humenansky

Vice President

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703/984-3888

David B. Kletter

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212/551-6501

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Vice President

[email protected]

703/984-0120

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